release 2019 figures press rabobank annual · wholesale funding 151,742 153,223 160,407 188,862...

Rabobank AnnualFigures PressRelease 2019

Rabobank Annual Figures Press Release 2019

Appendix - Rabobank Annual Figures Press Release 2019 2

Amounts in EUR millions 2019 2018 2017 2016 2015

Non-Financial Key Figures

Net promotor score Private Customers in the Netherlands 61 57 53 36 33

Net promotor score Private Banking Customers in the Netherlands 63 61 50 41 37

Net promotor score Corporate Customers in the Netherlands 51 53 43 30 21

% online active private customers in the Netherlands 64.0% 61.8% - - -

% online active corporate customers in the Netherlands 81.5% 80.8% - - -

Reptrak pulse score 71.5 70.8 69.5 66.1 -

Member engagement score 50% 44% - - -

Employee engagement scan 64 61 - - -

Financial Key Figures

Common equity tier 1 ratio (fully loaded) 16.3% 16.0% 15.5% 13.5% 12.0%

Total capital ratio (transitional) 25.2% 26.6% 26.2% 25.0% 23.2%

Leverage ratio (transitional) 6.3% 6.4% 6.0% 5.5% 5.1%

Risk-weighted assets 205,797 200,531 198,269 211,226 213,092

Wholesale funding 151,742 153,223 160,407 188,862 203,218

Cost/income ratio including regulatory levies 63.8% 65.9% 71.3% 70.9% 65.2%

Underlying cost/income ratio including regulatory levies 63.5%1 63.9% 65.3% 64.8% 64.6%

ROIC2 5.5% 7.4% 6.9% 5.2% 6.0%

Return on equity 5.3% 7.3% 6.7% 4.9% 5.5%

Return on assets 0.4% 0.5% 0.4% 0.3% 0.3%

Other Financial Figures

Income 11,915 12,020 12,001 12,805 13,014

Operating expenses 7,115 7,446 8,054 8,594 8,145

Impairment charges on financial assets 975 190 -190 310 1,033

Net profit 2,203 3,004 2,674 2,024 2,214

Total assets 590,598 590,437 602,991 662,593 678,827

Private sector loan portfolio 417,914 416,025 410,964 424,551 433,927

Deposits from customers 342,536 342,410 340,682 347,712 345,884

Equity 41,347 42,236 39,610 40,524 41,197

Loan-to-deposit ratio 1.21 1.21 1.21 1.22 1.25

Non-performing loans 15,705 18,436 18,315 18,873 19,763

Ratings

Standard & Poor’s A+ A+ A+ A+ A+

Moody’s Investors service Aa3 Aa3 Aa2 Aa2 Aa2

Fitch ratings AA- AA- AA- AA- AA-

DBRS AA AA AA AA AA

Sustainalytics Ranking category diversified banks 5 2 7 2 11

Sustainalytics ESG Risk Rating category diversified banks 1 1 - - -

About Rabobank

Local Rabobanks 89 101 102 103 106

Offices in the Netherlands 371 409 446 475 506

Availability of internet banking 99.7% 99.9% 99.9% 99.7% 99.8%

Availability of mobile banking 99.6% 99.9% 99.9% 99.7% 99.8%

Availability of iDEAL 99.7% 99.8% - - -

Community funds and donations 45.4 48.8 45.5 43.3 45

CO2 emissions (tonnes per FTE) 2.9 3.33 4.0 3.8 3.5

Sustainable Products & Services

Total sustainable financing 46,000 46,607 17,377 - -

Total sustainable assets under management and assets held in custody 6,399 4,726 4,030 3,835 2,843

Key Figures



Amounts in EUR millions 2019 2018 2017 2016 2015

Total sustainable funding 5,300 3,941 3,436 2,985 2,122

Total financial transactions supervised by Rabobank 6,701 7,140 6,236 5,750 6,313

Sustainability Performance (Client Photo) of Clients of Local Rabobanks in the Netherlands(exposure > EUR 1M) coverage4 98% 99% 98% 99% -

Sustainability Performance (Client Photo) of Clients of Local Rabobanks in the Netherlands(exposure > EUR 1M) % A-level5 8% 5% 4% 5% -

Sustainability Performance (Client Photo) of Clients of Wholesale offices (exposure > EUR 1M)coverage 86% 87% 73% 85% -

Sustainability Performance (Client Photo) of Clients of Wholesale offices (exposure > EUR 1M ) % A-level5 24% 24% 21% 26% -

Personnel Data

Number of employees (total in FTE)6 43,822 43,247 45,063 46,781 53,269

Diversity: % Women in Managing Board 40% 40% 40% 14% -

Diversity: % Women in first level below Managing Board 33% 31% 29% - -

Diversity: % Women employed in the Netherlands 51% 52% - - -

Staff costs 4,821 4,868 4,472 4,680 4,787

Absenteeism in the Netherlands 4.3% 4.3% 4.0% 3.6% 3.7%

1 Adjusted for the result on fair value items, the sale of RNA, restructuring expenses and the additional provision for the derivatives recovery framework

2 The ROIC is calculated by dividing the net profit realized after non-controlling interests by the core capital (actual tier 1 capital plus the goodwill in the

balance sheet at the end of the reporting period) minus deductions for non-controlling interests in Rabobank’s equity.

3 The 2018 figure is restated due to improved calculation method.

4 Please note that the coverage of Local Rabobank clients with a client photo could not be determined for the full population due to technical reasons.

5 We measure the sustainability performance of our clients with an exposure over EUR 1 million in a client photo ranking them from A-D.

6 As result of definition refinement the comparative FTE figures are adjusted.



December 31 December 31

Amounts in millions of euros 2019 2018

Assets

Cash and cash equivalents 63,086 73,335

Loans and advances to credit institutions 29,297 17,859

Financial assets held for trading 1,870 2,876

Financial assets designated at fair value 101 157

Financial assets mandatorily at fair value 1,905 2,134

Derivatives 23,584 22,660

Loans and advances to customers 440,507 436,591

Financial assets at fair value through other comprehensive income 13,505 18,730

Investments in associates and joint ventures 2,308 2,374

Goodwill and other intangible assets 829 966

Property and equipment 5,088 4,455

Investment properties 371 193

Current tax assets 169 243

Deferred tax assets 933 1,165

Other assets 6,610 6,431

Non-current assets held for sale 435 268

Total assets 590,598 590,437

Liabilities

Deposits from credit institutions 21,244 19,397

Deposits from customers 342,536 342,410

Debt securities in issue 130,403 130,806

Financial liabilities held for trading 399 400

Financial liabilities designated at fair value 6,328 6,614

Derivatives 24,074 23,927

Other liabilities 6,835 6,342

Provisions 783 1,126

Current tax liabilities 228 229

Deferred tax liabilities 540 452

Subordinated liabilities 15,790 16,498

Liabilities held for sale 91 -

Total liabilities 549,251 548,201

Equity

Reserves and retained earnings 28,157 27,264

Equity instruments issued by Rabobank

- Rabobank Certificates 7,449 7,445

- Capital Securities 5,264 6,493

12,713 13,938

Non-controlling interests

Equity instruments issued by subsidiaries

- Capital Securities - 164

- Trust Preferred Securities IV - 389

Other non-controlling interests 477 481

477 1,034

Total equity 41,347 42,236

Total equity and liabilities 590,598 590,437

Consolidated Statement of Financial Position



For the year ended December 31

Amounts in millions of euros 2019 2018

Interest income from financial assets using the effective interest method 15,898 15,960

Other interest income 259 321

Interest expense 7,674 7,722

Net interest income 8,483 8,559

Fee and commission income 2,151 2,106

Fee and commission expense 162 175

Net fee and commission income 1,989 1,931

Income from other operating activities 2,154 2,547

Expenses from other operating activities 1,684 1,964

Net income from other operating activities 470 583

Income from investments in associates and joint ventures 192 243

Gains/ (losses) arising from the derecognition of financial assets measured at amortised cost 73 14

Gains/ (losses) on financial assets and liabilities at fair value through profit or loss 156 238

Gains/ (losses) on financial assets at fair value through other comprehensive income 27 112

Other income 525 340

Income 11,915 12,020

Staff costs 4,821 4,868

Other administrative expenses 1,874 2,190

Depreciation and amortization 420 388

Operating expenses 7,115 7,446

Impairment on investments in associates 300 -

Impairment charges on financial assets 975 190

Regulatory levies 484 478

Operating profit before tax 3,041 3,906

Income tax 838 902

Net profit for the year 2,203 3,004

Of which attributed to Rabobank 1,295 1,894

Of which attributed to Rabobank Certificates 484 484

Of which attributed to Capital Securities issued by Rabobank 355 530

Of which attributed to Capital Securities issued by subsidiaries 4 14

Of which attributed to Trust Preferred Securities IV 19 22

Of which attributed to other non-controlling interests 46 60

Net profit for the year 2,203 3,004

Consolidated Statement of Income



As per the Financial statements 2019, Rabobank decided to

allocate recharges of the Head Office operations related to staff

expenses from Other administrative expenses to Staff costs to

better reflect a comprehensive cost view within the business

segments. The figures in the previous period segment

information have been adjusted accordingly to align with internal

management reporting.

Amounts in millions of euros Domestic RetailBanking WRR Leasing Real Estate Other Segments Consolidation

Effects Total

For the year ended December 31, 2019

Net interest income 5,258 2,458 1,052 (10) (273) (2) 8,483

Net fee and commission income 1,490 438 124 8 (21) (50) 1,989

Other results 67 766 255 308 (3) 50 1,443

Income 6,815 3,662 1,431 306 (297) (2) 11,915

Staff costs 2,738 1,396 536 84 214 (147) 4,821

Other administrative expenses 1,177 495 174 40 (15) 3 1,874

Depreciation and amortization 95 83 28 7 63 144 420

Operating expenses 4,010 1,974 738 131 262 - 7,115

Impairment on investments in associates - - - - 300 - 300

Impairment charges on financial assets 152 611 214 2 (4) - 975

Regulatory levies 270 140 26 2 46 - 484

Operating profit before tax 2,383 937 453 171 (901) (2) 3,041

Income tax 607 260 131 40 (200) - 838

Net profit 1,776 677 322 131 (701) (2) 2,203

Cost/income ratio including regulatory levies (in%)1 62.8 57.7 53.4 43.5 n/a n/a 63.8

Impairment charges on financial assets (in basispoints of average private sector loan portfolio)2 6 55 67 n/a n/a n/a 23

External assets 275,885 137,092 37,876 3,201 136,544 - 590,598

Goodwill 322 - 70 - - - 392

Private sector loan portfolio 271,165 112,410 33,169 256 914 - 417,914

1 Operating expenses plus regulatory levies divided by Income

2 Impairment charges on financial assets divided by 12-month average private sector loan portfolio

Business Segments



Amounts in millions of euros Domestic RetailBanking WRR Leasing Real Estate Other Segments Consolidation

Effects Total

For the year ended on December 31, 2018

Net interest income 5,575 2,388 986 (7) (383) - 8,559

Net fee and commission income 1,434 461 106 10 (35) (45) 1,931

Other results 56 486 274 571 102 41 1,530

Income 7,065 3,335 1,366 574 (316) (4) 12,020

Staff costs 2,765 1,292 517 137 215 (58) 4,868

Other administrative expenses 1,382 491 194 66 57 - 2,190

Depreciation and amortization 84 40 27 5 49 183 388

Operating expenses 4,231 1,823 738 208 321 125 7,446

Impairment charges on financial assets (150) 300 105 (15) (50) - 190

Regulatory levies 237 169 25 2 45 - 478

Operating profit before tax 2,747 1,043 498 379 (632) (129) 3,906

Income tax 712 333 99 70 (281) (31) 902

Net profit 2,035 710 399 309 (351) (98) 3,004

Cost/income ratio including regulatory levies (in%)1 63.2 59.7 55.9 36.6 n/a n/a 65.9

Impairment charges on financial assets (in basispoints of average private sector loan portfolio)2 (5) 29 34 (287) n/a n/a 5

External assets 280,691 139,963 35,227 2,979 131,577 - 590,437

Goodwill 322 125 72 - - - 519

Private sector loan portfolio 276,140 108,972 30,309 301 303 - 416,025

1 Operating expenses plus regulatory levies divided by Income

2 Loan impairment charges divided by 12-month average private sector loan portfolio



Rabobank

The low interest rate environment impacted our results in 2019. Net interest income was lower andthe continuting lower interest rates combined with the current economic outlook resulted in animpairment of EUR 300 million on our equity stake in Achmea. After a few years with exceptionallylow impairments, impairment charges on financial assets have returned to a more normalized level(23 basis points). As a result net profit decreased by EUR 801 million to EUR 2,203 million. In 2019 wereduced our expenses, but this decrease was tempered by investments in digitalization and increasedcosts for projects related to our regulatory agenda.

Our results were impacted by exceptional items like the sale of RNA to Mechanics Bank and theimpairment on our equity stake in Achmea. Corrected for these items,1 the underlying operating profitbefore tax amounted to EUR 3,294 (2018: 4,193) million. Despite a decrease in underlying income theunderlying cost/income ratio (including regulatory levies) improved to 63.5% (2018: 63.9%). Thereturn on equity (RoE) amounted to 5.3% (2018: 7.3%).

The sale of RNA had a downward effect on the size of our loan portfolio and deposits. Adjusted forthis divestment, our private sector loan portfolio increased by EUR 6.3 billion and deposits fromcustomers increased by EUR 10.5 billion. Lending increased at WRR and DLL, and deposits at DRBincreased by EUR 16.3 billion in 2019.

1 The non-recurring items include the result on fair value items, the sale of RNA, restructuring expenses, the additional provision for the derivatives recovery

framework and the impairment on our equity stake in Achmea.

Our Financial Performance



Financial Results of Rabobank

Results

in millions of euros 12-31-2019 12-31-2018 Change

Net interest income 8,483 8,559 -1%

Net fee and commission income 1,989 1,931 3%

Other results 1,443 1,530 -6%

Total income 11,915 12,020 -1%

Staff costs 4,821 4,868 -1%

Other administrative expenses 1,874 2,190 -14%

Depreciation and amortization 420 388 8%

Total operating expenses 7,115 7,446 -4%

Gross result 4,800 4,574 5%

Impairment losses on investments inassociates 300 0 -

Impairment charges on financial assets 975 190 413%

Regulatory levies 484 478 1%

Operating profit before tax 3,041 3,906 -22%

Income tax 838 902 -7%

Net profit 2,203 3,004 -27%

Impairment charges on financial assets (inbasis points) 23 5

Ratios

Cost/income ratio including regulatorylevies 63.8% 65.9%

Underlying cost/income ratio includingregulatory levies 63.5% 63.9%

RoE 5.3% 7.3%

Balance Sheet (in billions of euros)

Total assets 590.6 590.4 0%

Private sector loan portfolio 417.9 416.0 0%

Deposits from customers 342.5 342.4 0%

Number of internal employees (in FTEs) 34,451 35,850 -4%

Number of external employees(in FTEs) 9,371 7,397 27%

Total number of employees(in FTEs) 43,822 43,247 1%

Notes to the Financial Results of Rabobank

Net Profit Decreased to EUR 2,203 MillionLower income and higher impairment charges on financial assets

resulted in a net profit of EUR 2,203 (2018: 3,004) million which is

27% lower than last year. The persistent low interest rate

environment resulted in both lower net interest income and a

EUR 300 million impairment on our equity stake in Achmea.

Impairment charges on financial assets increased to EUR 975

(2018: 190) million. The continued downward trend in operating

expenses and the sale of RNA had a positive impact on net profit.

Underlying Performance Decreased by 21%The impact of the persistent low interest rate environment on

income and higher impairment charges on financial assets

explain our lower underlying results in 2019. The underlying

operating profit before tax fell by EUR 899 million to

EUR 3,294 million. In 2019, the underlying cost/income ratio –

including regulatory levies – improved to 63.5% (2018: 63.9%).

Development of Underlying Operating Profit Before Tax

in millions of euros 12-31-2019 12-31-2018

Income 11,915 12,020

Adjustments to income Fair value items 162 115

Sale RNA (372) 0

Underlying income 11,705 12,135


Adjustments to expenses Restructuring expenses 93 120

Derivatives framework 40 52

Sale RNA 30 0

Underlying expenses 6,952 7,274

Underlying gross result 4,753 4,861

Impairment losses oninvestments in associates Impairment Achmea 300 0

Impairment charges onfinancial assets 975 190



Total adjustments 253 287

Underlying operatingprofit before tax 3,294 4,193

Rabobank retained EUR 1,295 (2018: 1,894) million of its net profit

to bolster capital in 2019. Taxes amounted to EUR 838 (2018:

902) million, an effective tax rate of 28% (2018: 23%). The increase

in tax rate was partly due to the fact that a large part of additional

tier 1 capital instruments are not tax deductible anymore as from

January 1, 2019.

Slight Decrease in Income

Net Interest Income 1% LowerNet interest income totaled EUR 8,483 (2018: 8,559) million. This

1% decrease was the result of the persistent low interest rate

environment, which has specifically impacted margins on savings

and current accounts, partly mitigated by sound and stable

margins on new lending. The average net interest margin,

calculated by dividing the net interest income by the average

balance sheet total, changed from 1.41% in 2018 to 1.39% in 2019

due to a slightly higher average balance sheet total and a

decrease in net interest income.

Net Fee and Commission Income Up 3%Net fee and commission income increased by 3% to EUR 1,989

(2018: 1,931) million. At local Rabobanks, net fee and commission

income on payment accounts and insurances increased. At WRR

net fee and commission income decreased slightly due to lower

activity within Capital Markets and the M&A division. Net fee and

commission income at DLL increased by 17% mainly as a result



of higher fees earned on syndicated financial leases in the United

States.

Other Results Decreased by 6%Other results decreased to EUR 1,443 (2018: 1,530) million. On

balance, the gross loss on fair value items was higher than last

year: a loss of EUR 162 million in 2019 compared to a loss of

EUR 115 million in 2018. The sale of RNA boosted other results at

WRR. The Markets and Rabo Corporate Investment divisions could

not match 2018's strong performance as market conditions were

less favorable. Other results in the Real Estate segment decreased

by 46% as the results in 2018 included the proceeds from the sale

of the final part of FGH Bank's noncore CRE loan portfolio. Also,

BPD figures no longer include the results of BPD Marignan after

the sale of this subsidiary in 2018. At DLL other results went down

by 7% due to the release of a provision for DLL's foreign activities

in 2018.

Operating Expenses Decreased by 4%

Staff Costs Down 1%In 2019, Rabobank's total staff levels (including external hires)

increased by 575 FTEs to 43,822 (2018: 43,247) FTEs. A substantial

part of the incease in staff levels at DRB can be attributed to hiring

additional capacity for CDD and digitalization. This increase was

partly offset by a decrease in staff as a result of the

implementation of a new operating model in the Netherlands

(Bankieren 3.0). Staff levels at WRR decreased by 958 FTEs as a

result of the sale of RNA. This decrease was partly offset by staff

increases to support business growth within Rural and for

digitalization and compliance related activities. At DLL, staff levels

increased as expected in line with business growth. Despite the

overall FTE increase in 2019, average staff levels dropped by 1%

and consequently staff costs decreased by 1% to EUR 4,821 (2018:

4,868) million.

Other Administrative Expenses Decreased by 14%Total other administrative expenses decreased to EUR 1,874

(2018: 2,190) million. At DRB, Leasing and Real Estate,

administrative expenses were lower than in 2018. The decrease

at Real Estate is largely because of the phasing out of activities.

Higher compliance costs had an upward effect on other

administrative expenses.

Depreciation and Amortization Up 8%The increase in depreciation and amortization to EUR 420 (2018:

388) million is mainly the result of IFRS 16 and higher depreciation

on premises and real estate, equipment and outfitting in North

America, Asia and Europe.

Impairment Losses on Investments in AssociatesIn 2019, the operating profit before tax was pressured by a

technical non-cash impairment of Rabobank’s stake in Achmea

of EUR 300 million. The sustained low interest rate setting

continues to negatively affect companies in the European

insurance sector, including Achmea. The financial environment

has had, and is expected to continue to have in the future, an

adverse effect on Achmea’s business and its results. This

development triggered the assessment of the value of the

investment in Achmea. The test to establish whether a potential

impairment had occurred, resulted in downward adjustments of

the book value of the investment in Achmea.

Impairment Charges on Financial AssetsIn 2019 impairment charges on financial assets amounted to

EUR 975 million. After a period of exceptionally low impairment

charges, impairment charges returned to more normalized levels.

This represents an increase of EUR 785 million compared to 2018.

Impairment charges on financial assets amounted to 23 (2018: 5)

basis points, which is still below the long-term average (period

2009-2018) of 32 basis points. Due to less optimistic macro-

economic scenarios used for IFRS, impairment charges in stage 1

and 2 were EUR 239 (2018: minus 72) million.

As of December 31, 2019 the non-performing loans (NPL)

decreased to EUR 15.7 (2018: 18.4) billion. The NPL ratio was 3.0%

(2018: 3.5%) and the NPL coverage ratio was 20% (2018: 22%). The

favorable Dutch economic environment and the sale of the ACC

loan portfolio contributed to a further decline in the level of NPL

and to the improving NPL ratio.

Balance Sheet Developments

Balance Sheet

in billions of euros 12-31-2019 12-31-2018

Cash and cash equivalents 63.1 73.3

Loans and advances to customers 440.5 436.6

Financial assets 17.4 23.9

Loans and advances to banks 29.3 17.9

Derivatives 23.6 22.7

Other assets 16.7 16.0

Total assets 590.6 590.4

Deposits from customers 342.5 342.4

Debt securities in issue 130.4 130.8

Deposits from banks 21.2 19.4

Derivatives 24.1 23.9

Financial liabilities 6.7 7.0

Other liabilities 24.4 24.7

Total liabilities 549.3 548.2

Equity 41.3 42.2

Total liabilities and equity 590.6 590.4



Underlying Private Sector Loan Portfolio Increased byEUR 6.3 BillionThe sale of Rabobank National Association (RNA) to Mechanics

Bank tempered loan portfolio growth. Adjusting for the sale of

RNA the private sector loan portfolio increased by EUR 6.3 billion.

Even in spite of the sold loan portfolio of RNA, we reported

growth in our private sector lending of EUR 1.9 billion to

EUR 417.9 billion in 2019. At Domestic Retail Banking (DRB) the

mortgage portfolio decreased slightly due to the high level of

repayments and several whole loan sales transations. DRB's total

private sector loan portfolio decreased by EUR 4.9 billion to

EUR 271.2 billion. Excluding the sale of RNA, WRR’s loan portfolio

increased by EUR 7.8 billion and our leasing subsidiary DLL's

portfolio ended up EUR 2.9 billion higher than on December 31,

2018. The combined domestic commercial real estate loan

exposure over all segments was managed down further and

amounted to EUR 19.8 (2018: 21.2) billion on December 31, 2019.

Loan Portfolio


Total loans and advances to customers 440.5 436.6

Of which to government clients 2.0 1.9

Reverse repurchase transactions and securitiesborrowing 13.6 12.9

Interest rate hedges (hedge accounting) 7.0 5.8

Private sector loan portfolio 417.9 416.0

Domestic Retail Banking 271.2 276.1

Wholesale, Rural & Retail 112.4 109.0

Leasing 33.2 30.3

Real Estate 0.3 0.3

Other 0.8 0.3

The geographical split of the loan portfolio1 on December 31,

2019 was as follows: 70% in the Netherlands, 10% in North

America, 8% in Europe (outside the Netherlands), 6% in Australia

and New Zealand, 4% in Latin America, and 2% in Asia.

Loan Portfolio by Sector1


Loans to private individuals 191.3 46% 194.9 47%

Loans to trade, industry and services 119.4 29% 118.0 28%

of which in the Netherlands 82.4 81.5

of which in other countries 37.0 36.5

Loans to Food & Agri 107.2 26% 103.1 25%

of which in the Netherlands 37.9 38.1

of which in other countries 69.3 65.0

Private sector loan portfolio 417.9 100% 416.0 100%

1 In the country where the entity is established.

Underlying Deposits from Customers Increased byEUR 10.5 BillionTotal deposits from customers increased to EUR 342.5 (2018:

342.4) billion. The sale of RNA lowered deposits from customers:

adjusting for this sale, total deposits from customers increased

by EUR 10.5 billion. Deposits from DRB customers increased to

EUR 253.0 (2018: 236.7) billion. Deposits from customers in other

segments decreased to EUR 89.5 (2018: 105.7) billion mainly as the

result of the sale of RNA. Retail savings at DRB increased by

EUR 4.6 billion to EUR 123.7 billion. Total retail savings increased

by EUR 3.1 billion to EUR 145.8 billion.

Deposits from Customers


Retail savings 145.8 142.7


Other segments 22.1 23.6

Other deposits from customers 196.7 199.7


Other segments 67.4 82.0

Total deposits from customers 342.5 342.4

EquityIn 2019, Rabobank’s equity decreased to EUR 41.3 (2018:

42.2) billion partly because of the redemption of several Capital

Securities and Trust Preferred Securities IV. Rabobank’s equity on

December 31, 2019 consisted of 68% (2018: 64%) retained

earnings and reserves, 18% (2018: 18%) Rabobank Certificates,

13% (2018: 17%) hybrid capital and subordinated capital

instruments, and 1% (2018: 1%) other non-controlling interests.

Development of Equity

in millions of euros

Equity at the end of December 2018 42,236

Net profit for the period 2,203

Other comprehensive income 48

Payments on Rabobank Certificates and hybrid capital (904)

Redemption of Capital Securities (3,159)

Redemption of Trust Preferred Securities IV (383)

Issue of Capital Securities 1,250

Other 56

Equity at the end of December 2019 41,347

Wholesale FundingRabobank has been actively reducing its use of wholesale

funding. Doing so will make the bank less sensitive to potential

future financial market instability. In 2019, the amount of

wholesale funding decreased to EUR 151.7 (2018: 153.2) billion.

1 Based on debtor's country of establishment.



The main sources of wholesale funding are short- and long-term

issued debt securities.

Progress on Our Capital Targets

Capital ratios

Capital ratios


Retained earnings 28,910 28,062

Expected distributions (3) (46)

Rabobank Certificates 7,449 7,445

Part of non-controlling interest treated asqualifying capital 0 0

Reserves (753) (798)

Regulatory adjustments (2,007) (2,553)

Transition guidance 0 12

Common equity tier 1 capital 33,596 32,122

Capital securities 4,951 3,721

Grandfathered instruments 313 3,325

Non-controlling interests 0 0

Regulatory adjustments (106) (100)


Additional tier 1 capital 5,158 6,946

Tier 1 capital 38,754 39,068

Part of subordinated debt treated as qualifyingcapital 13,299 14,274

Non-controlling interests 0 0

Regulatory adjustments (92) (83)


Tier 2 capital 13,207 14,191

Qualifying capital 51,961 53,259

Risk-weighted assets 205,797 200,531

Common equity tier 1 ratio 16.3% 16.0%

Tier 1 ratio 18.8% 19.5%

MREL buffer 29.3% 28.2%

Total capital ratio 25.2% 26.6%

Equity capital ratio 17.7% 17.7%

Common equity tier 1 ratio of CoöperatieveRabobank U.A. solo (issuer level) 16.8% 16.0%

On December 31, 2019, our CET1 ratio amounted to 16.3% (2018:

16.0%). This is well above our >14% ambition. The increase of the

CET1 ratio was mainly due to addition of net profits to retained

earnings. An increase of RWAs partly offset this effect. Our

leverage ratio – that is, our tier 1 capital divided by balance sheet

positions and off-balance-sheet liabilities – is calculated based on

the definitions provided in the CRR/CRD IV. As at December 31,

2019 our leverage ratio was 6.4% (2018: 6.4%), which is well above

the minimum leverage ratio of 3% required by the Basel III

guidelines. In line with our capital strategy, our total capital ratio

decreased to 25.2% (2018: 26.6%), mainly the result of the call of

several Capital Securities and Trust Preferred Securities and higher

risk-weighted assets.

Funding and Liquidity

Regulatory CapitalOur external regulatory capital requirement is 8% of our risk-

weighted assets. It represents the minimum amount of capital

which the CRR and CRD IV require Rabobank to hold. The

regulatory capital of Rabobank amounted to EUR 16.5 (2018:

16.0) billion at December 31, 2019, of which 82% related to credit

and transfer risk, 15% to operational risk and 3% to market risk.

Rabobank calculates its regulatory capital for credit risk for almost

the entire loan portfolio using the advanced IRB approach

approved by our supervisory authority. In consultation with ECB,

Rabobank applies the standardized approach to portfolios with

relatively limited exposure and to some smaller portfolios outside

the Netherlands that are not suitable for the advanced IRB

approach.

Rabobank measures operational risk using an internal model,

approved by the ECB, that is based on the advanced

measurement approach. For market risk exposure, the ECB has

given Rabobank permission to calculate our general and specific

position risk using own internal value-at-risk (VaR) models, based

on the CRR.

Regulatory Capital by Business Segment



Wholesale, Rural & Retail 6.7 6.6

Leasing 1.6 1.5

Real Estate 0.3 0.4

Other 1.7 1.0

Rabobank 16.5 16.0

Minimum Requirement for Own Funds andeligible Liabilities

Rabobank aims to protect senior creditors and depositors against

the unlikely event of a bail-in. Rabobank therefore holds a large

buffer of equity, subordinated and non-preferred debt that will

first absorb losses in the event of a bail-in.

Rabobank has received formal notification from De

Nederlandsche Bank (DNB) of the Single Resolution Board’s (SRB)

determination of the binding minimum requirement for own

funds and eligible liabilities (MREL). The MREL requirement has

been established to ensure that banks in the European Union

have sufficient own funds and eligible liabilities to absorb losses



in the case of a potential bank failure. This MREL requirement is

set at a consolidated level of Rabobank, as determined by the

SRB. This SRB’s calibration of the MREL requirement is based on

Rabobank’s full-year 2017 results. The requirement has been set

at a percentage of 9.64% of Total Liabilities and Own Funds

(TLOF), which corresponds to 28.58% of RWA as at 2017, and

consists of a loss absorption amount, a recapitalization amount

and a market confidence amount. This calibration is based on the

framework for MREL under BRRD I, the EBA RTS and the 2018 SRB

MREL policy.

The adoption of CRR2 and BRRD2 (as part of the “Banking Risk

Reduction package”) which contain a revised MREL framework,

will likely translate to changes to banks' MREL requirements. The

revised SRB MREL policy that takes into account the legislative

changes, has not yet been published and is expected in the

course of 2020. As under BRRD, the MREL framework in CRR2 and

BRRD2 also allows for some portion of the MREL requirement to

be met with Preferred Senior debt under certain conditions,

subject to minimum subordination requirements. Rabobank

intends to meet its MREL requirement with a combination of Own

Funds, (other) subordinated instruments and Non Preferred

Senior only. As such, we define our MREL eligible capital and debt

buffer as qualifying capital plus the non-qualifying part of the

grandfathered additional tier 1 instruments, the amortized part

of tier 2 capital instruments with a remaining maturity of at least

one year and Non-Preferred Senior bonds with a remaining

maturity of at least one year. In 2018 and 2019, Rabobank issued

a number of Non-Preferred Senior bonds. With MREL eligible

capital and debt of EUR 60.3 billion (2018: 56.6) or 29.3% (2018:

28.2%) of risk-weighted assets, the MREL needs are manageable.

MREL Eligible Capital and Non-Preferred Senior Bonds Buffer


Qualifying capital 52.0 53.3

Non qualifying grandfathered additional tier 1 capital 0.0 0.0

Amortized tier 2 >1 year remaining maturity 1.7 1.3

Non-Preferred Senior bonds > 1 year remainingmaturity 6.7 2.1

MREL eligible capital and Non-Preferred Seniorbonds buffer 60.3 56.6

Risk-weighted assets 205.8 200.5

MREL eligible capital and Non-Preferred Senior bondsbuffer / risk-weighted assets 29.3% 28.2%

Pillar II Capital Framework

The relevant rules and regulations related to the capital adequacy

process of EU banks are addressed in the CRR/CRD IV

comprehensive frameworks. These frameworks are the EU legal

translation of the banking guidelines suggested by the Basel

Committee - the so-called Basel III standards from December

2010. CRR/CRD IV lays out a three-pillar approach to risk and

capital management: the Pillar I on minimum capital

requirements of credit, market and operational risk; Pillar 2 about

supervisory review process (SREP); and Pillar 3 on market

discipline, where banks disclose to the public their overall risk

profiles.

Pillar 2 describes the mandatory processes for both banks and

regulators to fulfill the capital adequacy requirements. The main

areas that fall under this Pillar are: risks considered under Pillar I

that are not fully or adequately captured by the prescribed

methodologies; risks that are not considered in the Pillar I capital

requirements (e.g. interest rate risk); and external factors to the

bank (e.g. market conditions). In addition, Rabobank does its

utmost to be up to speed with not only recent best practices

guidelines, such as the “Overview of Pillar 2 supervisory review

practices and approaches” document published in June 2019 by

the Basel Committee on Banking Supervision (BIS), but also

growing supervisory and industry trends such as climate risk,

cyber risk, among others.

The Pillar 2 capital framework covers all those areas where

Rabobank is of the opinion that the regulatory framework does

not address the risk, or does not adequately address the risk.

Rabobank developed mostly statistical approaches and

methodologies that: (1) challenge regulatory capital

requirements; (2) cover risks not addressed in CRR/CRD IV; and (3)

identify possible future events or changes in the market

conditions that could impact Rabobank’s strategic planning.

The outputs of the Pillar 2 models are used for various purposes

within the bank, such as deal acceptance and pricing, strategy and

planning of the firm’s operations, and performance evaluation.

Moreover, the regulators and supervisors view the level of

capitalization as one of their key instruments to supervise

Rabobank. Therefore, the Pillar 2 capital framework promotes a

sound and effective risk management culture within Rabobank,

ensuring adequate capital levels to support business growth,

maintain depositor and creditor confidence and comply with

regulatory requirements.



Domestic Retail Banking

Highlights

In the Netherlands, Domestic Retail Banking is a leading player in providing loans in the residential mortgage market and it offers

products and service regarding savings, payments, investments and insurances. We as Rabobank are also a dominant player in the

SME and Food & Agri market. The segment consist of the local Rabobanks and mortgage lender Obvion. Income was pressured by the

low interest rate environment and as a result net interest income was down by 6%. Operating expenses decreased by 5% in 2019. Staff

costs were slightly lower as digitalization and centralization of services had a downward effect on the average staff level. Deposits from

customers increased in 2019 by EUR 16.2 billion, while the private sector loan portfolio decreased by 2%. Our mortgage loan portfolio

decreased by EUR 2.4 billion, while the SME loan portfolio decreased by EUR 2.4 billion.

Financial Results

Results


Net interest income 5,258 5,575 -6%

Net fee and commission income 1,490 1,434 4%

Other results 67 56 20%

Total income 6,815 7,065 -4%

Staff costs 2,738 2,765 -1%

Other administrative expenses 1,177 1,382 -15%


Total operating expenses 4,010 4,231 -5%

Gross result 2,805 2,834 -1%

Impairment charges on financial assets 152 (150) -


Operating profit before tax 2,383 2,747 -13%

Income tax 607 712 -15%

Net profit 1,776 2,035 -13%

Impairment charges on financial assets (inbasis points) 6 (5)

Ratios




External assets 275.9 280.7 -2%

Private sector loan portfolio 271.2 276.1 -2%

Deposits from customers 253.0 236.7 7%


Number of external employees (in FTEs) 6,976 5,088 37%

Total number of employees (in FTEs) 26,889 25,435 6%

Notes to the Financial Results



Income 6,815 7,065


Adjustments to expenses Restructuringexpenses 57 69

Derivativesframework 40 52


Impairment charges on financialassets 152 (150)




Underlying operating profit beforetax 2,480 2,868

Underlying Performance Decreased 14%Domestic Retail Banking's underlying performance decreased in

2019 compared to 2018. The underlying operating profit before

tax amounted to EUR 2,480 million compared to EUR 2,868 million

in 2018. In calculating this underlying profit before tax, we made

corrections for restructuring costs and for the additional provision

taken for the interest rate derivatives framework. Total income

decreased by EUR 251 million lower, while underlying operating

expenses decreased by EUR 197 million. Higher impairment

charges on financial assets of EUR 152 million tempered net profit.

Income Down 4%Total income decreased to EUR 6,815 (2018: 7,065) million.

Despite slighty increased margins on mortgages, net interest

income was pressured by shrinking margins on savings and

current accounts as a result of the low interest rate environment.

Total net interest income of EUR 5,258 (2018: 5,575) million was

6% lower than in 2018. Increased fees on payment accounts and

on insurances helped to lift net fee and commission income to



EUR 1,490 (2018: 1,434) million. Other results amounted to EUR 67

(2018: 56) million at December 31, 2019.

Operating Expenses Down 5%Total operating expenses decreased to EUR 4,010 (2018:

4,231) million. Staff costs fell to EUR 2,738 (2018: 2,765) million as

the digitalization and centralization of services reduced the

average size of the workforce. The implementation of a new

operating model in the Netherlands (known as 'Bankieren 3.0')

had a downward effect on the number of employees in the

segment, while the regulatory agenda required extra staff in

2019. Other administrative expenses went down to EUR 1,177

(2018: 1,382) million. The revaluation of property for own use

lowered expenses by EUR 60 million. In 2018 this item had an

upward effect on other administrative expenses of EUR 61 million.

Project expenses related to the derivatives project were

EUR 33 million lower than last year and restructuring costs were

lower and amounted to EUR 57 (2018: 69) million. Depreciation

and amortization increased to EUR 95 (2018: 84) million, partly

caused by the implementation of IFRS 16.

Impairment Charges on Financial Assets IncreasedThe impairment charges on financial assets increased in 2019, but

are still on a low level benefitting from the favorable economic

conditions in the Netherlands. Impairment charges on financial

assets amounted to EUR 152 (2018: minus 150) million, which

translates to 6 (2018: minus 5) basis points of the average private

sector loan portfolio – far below the long-term average of 20

basis points.

Loan Portfolio DecreasedThe persisting low interest rate on savings accounts continued

to encourage clients to make extra repayments on their loans. In

2019, clients’ extra mortgage repayments – all those on top of the

mandatory repayments – at local Rabobanks and Obvion totalled

approximately EUR 19.5 (2018: 19.2) billion. Of this amount

EUR 3.7 (2018: 3.5) billion is related to partial repayments and

EUR 15.8 (2018: 15.7) billion to repayments of the full mortgage,

which is mainly the result of customers moving houses. The total

volume of our residential mortgage loan portfolio on December

31, 2019 was EUR 187.6 (2018: 190.0) billion. The sale of shares of

our mortgage loan portfolio (worth EUR 1.8 billion) to

institutional investors contributed to this decrease. The figure

includes Obvion’s loan portfolio, valued at EUR 29.7 (2018:

28.5) billion. The total Domestic Retail Banking portfolio

(including business lending) decreased by EUR 4.9 billion to

EUR 271.2 (2018: 276.1) billion and the total SME portfolio

currently amounts to EUR 81.4 (2018: 83.8) billion.

Loan Portfolio by Sector


Volume of loans to private individuals 189.8 192.3

Volume of loans to trade, industry & services 56.2 57.7

Volume of loans to Food & Agri 25.2 26.1

Private sector loan portfolio 271.2 276.1

Mortgage Loan PortfolioRabobank’s share of the Dutch mortgage market increased to

20.9% (2018: 20.3%) of new mortgage production in 20191. The

local Rabobanks’ market share dropped to 15.5% (2018: 16.7%)

and Obvion’s increased to 5.4% (2018: 3.6%). The quality of our

residential mortgage loan portfolio remained high as a result of

the continuing favorable conditions of the Dutch economy and

the strong domestic housing market. In 2019, financing backed

by the National Mortgage Guarantee (Nationale Hypotheek

Garantie (NHG)) decreased to 18.7% of the mortgage loan

portfolio. The weighted average indexed loan-to-value (LTV) of

the mortgage loan portfolio was 60% on December 31, 2019.

Residential Mortgage Loans


Mortgage portfolio 187,671 190,008

Weighted-average LTV 60% 64%

Non-performing loans (amount) 1,609 2,057

Non-performing loans (in % of total mortgage loanportfolio) 0.86% 1.08%

More-than-90-days arrears 0.21% 0.30%

Share NHG portfolio 18.7% 19.4%

Impairment allowances on financial assets 198 209

Coverage ratio based on non-performing loans 12% 10%

Net additions 16 (29)

Net additions (in basis points) 1 (2)

Write-offs 32 42

The non-performing loans in the mortgage portfolio are lower

than at year-end 2018. This is a result of the improving credit

quality of the mortgage portfolio.

Deposits from Customers Increased EUR 16.3 BillionThe private savings market in the Netherlands grew by 4% to

EUR 368.2 (2018: 355.6) billion as per December 31, 2019 despite

the fact that clients applied excess savings to de-leverage their

mortgage debt, prompted by the low interest rates on savings.

Rabobank’s market share was 33.0% (2018: 32.7%)2 . Deposits from

customers rose 7% to EUR 253.0 (2018: 236.7) billion. Private

1 Source: Dutch Land Registry Office (Kadaster)



savings deposited at Domestic Retail Banking increased by

EUR 4.6 billion to EUR 123.7 (2018: 119.1) billion. Other deposits

from customers went up by EUR 11.6 billion mainly due to an

increase in current accounts.

Insurance Income Increased EUR 15.5 millionRabobank offers retail and business customers a complete range

of advisory services and product solutions, including insurance.

For insurance products, Achmea (via its Interpolis brand) is

Rabobank’s most important strategic partner and supplier. Total

insurance income of Rabobank grew by 6% to EUR 293.3 (2018:

277.8) million.

2 Source: Statistics Netherlands (Centraal Bureau voor de Statistiek)



Wholesale, Rural and Retail

Highlights

The activities of the Wholesale, Rural & Retail (WRR) segment are spread across six regions: the Netherlands & Africa, North America,

South America, Australia & New Zealand, Europe and Asia. Rabobank's Banking for Food and Banking for the Netherlands strategies

are the driving force behind the portfolio. The change in strategy for our Retail activities over the past years are exemplified by the sale

of RNA (North America) and the de-risking of ACC (Ireland) and RII (Indonesia) in 2019. Rabobank increased its focus on Food & Agri in

North America by the sale of the non-F&A activities of RNA and the transfer of the Food & Agri portfolio to Rabo Agrifinance (RAF). The

sale of RNA was finalized in August and up until then RNA's results still contributed to WRR segment's results. WRR's underlying

performance was lower in 2019, as illustrated by the development of the underlying operating profit before tax, which decreased to

EUR 602 million. The underlying loan portfolio increased and despite some pressure on margins net interest income showed an increase.

Impairment charges on financial assets increased by EUR 311 million in 2019 and are the most important driver for the lower net profit.

Net profit was also pressured by higher operating expenses related to growth initiatives and compliance.

Financial Results

Results


Net interest income 2,458 2,388 3%

Net fee and commission income 438 461 -5%

Other results 766 486 58%

Total income 3,662 3,335 10%

Staff costs 1,396 1,292 8%

Other administrative expenses 495 491 1%


Total operating expenses 1,974 1,823 8%

Gross result 1,688 1,512 12%


Regulatory levies 140 169 -17%

Operating profit before tax 937 1,043 -10%

Income tax 260 333 -22%

Net profit 677 710 -5%


Ratios




External assets 137.1 140.0 -2%

Private sector loan portfolio 112.4 109.0 3%


Number of external employees (in FTEs) 1,628 1,576 3%

Total number of employees (in FTEs) 9,897 10,855 -9%




Income 3,662 3,335

Adjustments to income Sale RNA (372) 0

Underlying income 3,290 3,335



Sale RNA 30 0


Impairment charges onfinancial assets 611 300


Operating profit before tax 937 1,043

Total adjustments (335) 7

Underlying operating profitbefore tax 602 1,050

Underlying Performance Impacted by ImpairmentChargesThe underlying operating profit before tax amounted to

EUR 602 million compared to EUR 1,050 million in 2018. In

calculating this underlying profit before tax, corrections were

made for gain on the sale of RNA and for restructuring costs.

Total underlying income decreased by 1% and underlying

operating expenses increased by 7%. On top of that, higher

impairment charges on financial assets had a downward effect

on profit.

Income Up 10%Total income of WRR increased to EUR 3,662 (2018: 3,335) million

in 2019. The increase in income was largely attributable to the

sale of RNA. Corrected for the sales result of RNA total income

decreased by 1%. Despite a slight decrease in average



commercial margins net interest income increased to EUR 2,458

(2018: 2,388) million. This increase was driven by higher lending

volumes. The strongest increase in net interest income was in our

corporate and rural lending while the increase was tempered by

a negative margin development in Brazil. Net fee and commission

income declined to EUR 438 (2018: 461) million due to lower

activity levels in corporate finance, which is in line with market

circumstances. Other results increased by EUR 280 million to

EUR 766 (2018: 486) million mainly due to the sale of RNA. The

increase in other results was tempered by the results of our

Markets division which was confronted with less favorable market

conditions, and lower revaluations at our Corporate Investment

division. Furthermore, the positive revaluation of ACC Loan

Management's loan portfolio positively impacted other results in

2018.

Operating Expenses Increased 8%Operating expenses went up to EUR 1,974 (2018: 1,823) million

in 2019. Excluding FX effects, operating expenses increased by

6%. Staffing levels at WRR showed a 9% decrease in 2019. The

decrease as a result of the sale of RNA was partly offset by growth

initiatives within Rural and additional staff related to digitalization

and compliance. Staff costs increased to EUR 1,396 (2018:

1,292) million, an 8% increase compared to last year. Other

administrative expenses decreased to EUR 495 (2018: 491) million.

Depreciation and amortization went up to EUR 83 (2018:

40) million due to higher depreciation on premises and real

estate, equipment and outfitting in North America, Asia and

Europe.

Impairment Charges on Financial Assets Up EUR 311MillionImpairment charges on financial assets increased to EUR 611

(2018: 300) million in 2019. Significant impairments were seen in

the Netherlands and Europe related to some non-related large

individual cases and high impairments in Brazil (mainly sugar and

ethanol) and the United States (mainly farm nutrition). The

impairments have been rising since the first half of 2018. Total

impairment charges on financial assets amounted to 55 (2018: 29)

basis points of the average private sector loan portfolio, above the

long-term average of 52 basis points.

WRR Portfolio IncreasedIn 2019, the total loan portfolio of WRR increased to EUR 112.4

(2018: 109.0) billion. The increase of the loan portfolio was partly

offset by the sale of RNA to Mechanics Bank. Excluding the sale

of RNA, the loan portfolio increased by EUR 7.8 billion. Because

we consolidated our agribusiness operations across the United

States, RNA's Food & Agri assets of RNA were not included in the

sale and have been transferred to Rabobank AgriFinance (RAF).

Reflecting our Banking for Food strategy, the volume of lending

to the Food & Agri sector increased to EUR 71.2 (2018:

66.5) billion, accounting for 63% (2018: 61%) of WRR’s total loan

portfolio. Loans to the Trade, Industry, and Services (TIS) sectors

remained stable at EUR 40.4 (2018: 40.4) billion.

Dutch and International WholesaleThe Wholesale portfolio totaled EUR 76.8 (2018: 70.9) billion.

Lending to the largest Dutch companies increased in 2019 to

EUR 20.3 (2018: 17.9) billion and the size of the Wholesale loan

portfolio granted to clients outsid the Netherlands was EUR 56.5

(2018: 53.0) billio on December 31, 2019.

International Rural BankingLending to rural clients amounted to EUR 35.6 (2018: 33.0) billion.

The main markets for rural banking are Australia, New Zealand, the

United States and Brazil, while we are also present in Chile, Peru

and Argentina. In Australia the loan portfolio totaled EUR 11.0

(2018: 10.2) billion, in New Zealand EUR 6.9 (2018: 6.4) billion, in

the United States EUR 13.0 (2018: 12.2) billion, in Brazil EUR 3.6

(2018: 3.2) billion, in Chile, Peru and Argentina in aggregate

EUR 1.0 (2018: 0.9) billion .

Private Savings at RaboDirect Increased 5%RaboDirect is Rabobank’s online savings bank that operates in

Belgium, Germany, Australia, and New Zealand. Private savings

entrusted by clients to RaboDirect are used for funding the

international Rural banking business and other divisions of the

bank. RaboDirect's savings balances increased to EUR 26.0 (2018:

24.7) billion at December 31, 2019, representing 18% (2018: 17%)

of the total private savings held at Rabobank. The number of

internet savings bank clients decreased to approximately 690,000

(2018: 750,000). This decrease can be explained by a change of

definition where, as of 2019, only active clients are reported.



Leasing

Highlights

DLL promotes Rabobank’s ambition of "Growing a better world together" by supporting manufacturers, distributors and end-users in

9 different sectors: Agri, Food, Healthcare, Clean Technology, Construction, Transportation, Industrial, Office Equipment and Technology

Industries. In 2019, DLL celebrated its 50th anniversary and launched a new company strategy – "Partnering for a Better World" – in

order to further build on its solid foundation and to drive future success. It has always been DLL’s ambition to align its product and

service offering with customer needs and market developments. Today, businesses want the flexibility to pay for their equipment and

technology as they use it. To address this rapidly growing trend, DLL has established a new global business unit, "Advanced Solutions",

that will focus on further developing DLL's leading position in pay-per-use products. Financially, DLL’s net profit decreased by 19%,

caused by an increase in impairment charges on financial assets and higher income taxes. The lease portfolio grew by 8%. In 2019, the

Food & Agri share of the portfolio increased to EUR 14.5 (2018: 12.8) billion, representing 40% (2018: 38%) of the DLL portfolio.

Financial Results

Results


Net interest income 1,052 986 7%

Net fee and commission income 124 106 17%

Other results 255 274 -7%

Total income 1,431 1,366 5%

Staff costs 536 517 4%

Other administrative expenses 174 194 -10%


Total operating expenses 738 738 0%

Gross result 693 628 10%



Operating profit before tax 453 498 -9%

Income tax 131 99 32%

Net profit 322 399 -19%


Ratios




Lease portfolio 36.2 33.5 8%

Number of internal employees (in FTEs) 4,877 4,672 4%

Number of external employees (in FTEs) 426 474 -10%

Total number of employees (in FTEs) 5,303 5,146 3%




Income 1,431 1,366

Operating expenses 738 738

Adjustments to expenses Restructuringexpenses (1) 7

Underlying expenses 739 731

Impairment charges on financialassets 214 105


Operating profit before tax 453 498

Total adjustments (1) 7

Underlying operating profit beforetax 452 505

Income Improved 5%Total income of the Leasing segment increased by 5% to

EUR 1,431 (2018: 1,366) million in 2019. Net interest income

increased by 7% to EUR 1,052 (2018: 986) million, mainly as a

result of portfolio growth. In 2018 net interest income was

negatively affected by several residual value impairments on

Food & Agri assets. Net fee and commission income increased to

EUR 124 (2018: 106) million. This is mainly the result of higher fees

earned on syndicated leases in the United States. Other results,

mainly consist of income from operating leases and sales on end-

of-lease assets, decreased to EUR 255 (2018: 274) million. The

decrease was entirely due to the release of a provision for foreign

activities of DLL in 2018 and partly compensated by lower asset

impairments in 2019.

Operating Expenses Remained StableTotal operating expenses in the Leasing segment were EUR 738

(2018: 738) million. Staff costs increased to EUR 536 (2018:

517) million, caused by the higher number of employees. Staff



levels in the Leasing segment increased by 157 FTEs to 5,303 FTEs

in 2019 as a result of business growth. Other administrative

expenses decreased to EUR 174 (2018: 194) million as

restructuring costs were lower in 2019. Depreciation and

amortization remained stable at EUR 28 (2018: 27) million.

Impairment Charges on Financial Assets IncreasedImpairment charges on financial assets of the Leasing segment

increased to EUR 214 (2018: 105) million, corresponding with 67

(2018: 34) basis points of the average loan portfolio and above

DLL's long term average of 56 basis points. As DLL’s lease

portfolio is spread over more than 30 countries and 9 industries,

the associated credit risk is geographically diverse and well

balanced across all industry sectors. In 2019, there were no new

significant individual default cases in DLL's predominantly small

ticket portfolio. The IFRS 9 stage 1 and 2 impairments were an

important driver of the higher risk costs. These amounted to

EUR 43 (2018: 0) million, mainly caused by changes in the macro

economic outlook .

Income Tax Up 32%Income tax in the Leasing segment increased to EUR 131 million

from EUR 99 million. The higher income taxes are for a large part

due to a one-off tax liability following a change in the fiscal

structure of a DLL subsidiary.

Lease Portfolio Increased 8%The lease portfolio increased to EUR 36.2 (2018: 33.5) billion. In

2019, the Food & Agri share of the portfolio increased to EUR 14.5

(2018: 12.8) billion, representing 40% (2018: 38%) of the DLL

portfolio.



Real Estate

Highlights

The Real Estate segment is mainly comprised of the activities of Bouwfonds Property Development (BPD). BPD's is an area developer

operating in the Netherlands and Germany. In 2018 BPD sold its French subsidiary BPD Marignan. BPD could not match the very strong

results of 2018. This was the result of changed market conditions and the nitrogen problem in the Netherlands. As a consequence BPD,

sold fewer houses in both the Netherlands and Germany. Up until June 2018 FGH Bank was also part of the Real Estate segment but

this entity ceased to exist after Rabobank sold the remaining part of the loan portfolio to RNHB. Since 2018 the activities of Bouwfonds

Investment Management (BIM) have been phased out and, therefore, represented only a small part of the Real Estate segment's results

in 2019.

Financial Results

Results


Net interest income (10) (7) 43%

Net fee and commission income 8 10 -20%

Other results 308 571 -46%

Total income 306 574 -47%

Staff costs 84 137 -39%

Other administrative expenses 40 66 -39%


Total operating expenses 131 208 -37%

Gross result 175 366 -52%

Impairment charges on financial assets 2 (15) -


Operating profit before tax 171 379 -55%

Income tax 40 70 -43%

Net profit 131 309 -58%

of which: BPD 116 240 -52%

Ratios

Cost/income ratio incl. regulatory levies 43.5% 36.6%

Underlying cost/income ratio incl.regulatory levies 43.1% 35.2%


Loan portfolio 0.3 0.3 0%

Number of houses sold 6,471 10,142 -36%

Number of internal employees (in FTEs) 605 588 3%

Number of external employees (in FTEs) 96 59 63%

Total number of employees (in FTEs) 701 647 8%




Income 306 574

Operating expenses 131 208


Underlying expenses 130 200

Impairment charges on financialassets 2 (15)


Operating profit before tax 171 379


Underlying profit before tax 172 387

Income Decreased 47%Ttotal income of the Real Estate segment decreased to EUR 306

(2018: 574) million. Net interest income decreased mainly as a

result of the sale of the remaining part of the loan portfolio of FGH

Bank in 2018. Net fee and commission income decreased to

EUR 8 (2018: 10) million as the activities of BIM are phased out.

Other results ended lower at EUR 308 (2018: 571) million. The

decrease in other results is partly caused by BPD's pressured

result following a delay in sales in 2019 and the nitrogen

discussion in the Netherlands. Other results were also impacted

by the deconsolidation of its French subsidiary, following the sale

of BPB Marignan in November 2018. Furthermore, the 2018

figures were also positively impacted by a book gain on the sale

of FGH Bank's loan portfolio.

Operating Expenses Down 37%Total operating expenses decreased to EUR 131 (2018:

208) million. The sale of BPD Marignan and the remaining part of

the loan portfolio of FGH Bank, as well as the phasing out of BIM,

resulted in a decrease in a EUR 53 million decrease in staff costs,

totaling EUR 84 (2018: 137) million compared to 2018. Staff levels

increased by 8% in 2019 to 701 FTEs. Other administrative



expenses decreased to EUR 40 (2018: 66) million due to the sale

and phasing out of activities. Depreciation and amortization

increased slightly to EUR 7 (2018: 5) million.

Market Conditions Lower Number of PropertyTransactionsThe number of residential property transactions by BPD fell by

36% to 6,471 (2018: 10,142). This decrease can be mainly

attributed to the sale of BPD Marignan in November 2018.

Excluding BPD Marignan the number of property transactions

decreased by 15% as a result of a delay in sales. It took longer to

put new construction projects on the market and the average

time to sell increased due to higher prices. Moreover, in the

course of 2019, BPD also began to notice the effects of the

nitrogen issues in the Netherlands which also negatively affected

the number of sales. In the Netherlands BPD sold 4,485 houses

(2018: 5,470). The total transactions in Germany amounted to

1,986 (2018: 2117).



Impairment Charges and Impairment Allowances onFinancial AssetsIn 2019 impairment charges on financial assets significantly

increased, especially in WRR and DLL. For the Dutch portfolio they

were still relatively low. The ongoing favorable economic

development in the Netherlands was the key factor in this

outcome, resulting in few new defaults, recovery of existing

defaults or realization of collateral at better than expected

collateral values, and release of part of the allowances for existing

impaired clients due to increased collateral values.

Impairment Charges and Impairment Allowances on Financial Assets

2019 2018

In millions of euros Impairmentcharges

Impairmentcharges in basis

points

Allowances(12/31/2019)

impairmentcharges

impairmentcharges in basis

points

Allowances (12/31/2018)

Domestic retail banking 152 6 2,132 (150) (5) 2,267

Wholesale, Rural & Retail 611 55 1,596 300 29 1,330

Leasing 214 67 362 105 34 268

Real Estate 2 71 14 (15) (287) 7

Other (4) n/a - (49) 1 -

Rabobank 975 23 4,104 190 5 3,873

Impairment charges were 23 basis points of the average private

sector loan portfolio. The historical ten-year average (period

2009-2018) of the impairment charges is 32 basis points. With the

realization of 2019 the ten-year average (period 2010-2019)

decreases to 29 basis points.

The table above can be split in IFRS 9 stages. Due to the use of

less optimistic scenarios in 2019 the impairment charges in Stage

1 & 2 were substantially higher than in 2018.

Impairment Charges on Financial Assets per IFRS 9 Stage

In millions of euros 2019 2018

Stage 1 111 (37)

Stage 2 128 (35)

Stage 3 736 262

Rabobank 975 190

Development of the Impairment Allowance on Financial Assets

In millions of euros

Allowance Write-offs Netadditions

Other Allowance Received after write-offs Impairment charges

12-31-2018 2019 2019 2019 12-31-2019 2019 2019

(I) (II) (III) (IV) (V) (VI) (VII=III+VI)

3,873 (735) 1,078 (112) 4,104 (102) 975

ForbearanceFor the corporate portfolio, forbearance measures are identified

using the Loan Quality Classification framework. Forbearance

measures apply only to the classified portfolio. If forbearance

measures are permitted for a debtor, this debtor will

automatically be passed to the Financial Restructuring & Recovery

(FR&R) department. Debtors in the private loan portfolio to whom

forbearance measures are applied must also be included in the

FR&R portfolio. Items in the forbearance category must be

reported for up to two years after their recovery from ‘non-

performing’ to ‘performing’. This period of two years is referred

to as ‘Forborne under probation’. Expressed as a percentage of

total gross carrying amount, forborne loans accounted for 2.1%

(2018: 2.2%) at December 31, 2019.

Risk Management



Forborne Assets at 12-31-2019

In millions of euros Private sectorloan portfolio

Forborne assets(gross carrying

amount)

Performingforborne assets

Non-performingforborne assets

Allowances fornon-performing

forborne assets

Domestic retail banking 271,165 5,593 1,719 3,874 662

Wholesale, Rural & Retail 112,410 5,243 1,705 3,538 651

Leasing 33,169 173 76 96 22

Real estate 256 - - - -

Other 913 - - - -

Rabobank 417,914 11,008 3,500 7,508 1,335

Non-performing loans (NPL) amounted to EUR 15,705 (2018:

18,436) million at December 31, 2019. The NPL coverage ratio was

20% (2018: 22%). Expressed as a percentage of total gross carrying

amount, non-performing loans accounted for 3.0% (2018: 3.5%)

at December 31, 2019.

Non-Performing Loans

In millions of euros 12-31-2019 12-31-2018

Domestic retail banking 9,488 11,794

Wholesale, Rural & Retail 5,267 6,115

Leasing 886 478

Real estate 65 49

Rabobank 15,705 18,436

Financial Sector GatekeeperRabobank considers its role as gatekeeper for the financial system

as its core task and gives this highest priority. As a foundation of

good customer service and in order to comply with laws and

regulations, the bank has substantially refined its CDD activities

over the past years. After receiving an injunction (last onder

dwangsom) in September 2018 these activities were further

intensified. From April 1, 2020 onwards, DNB will verify if

Rabobank meets all requirements of the injunction and will

validate among other things if, as a result, Rabobank has classified

its client portfolio adequately. In 2019 Rabobank invested

substantially in CDD- and AML-activities and employed over 1,750

new CDD-analysts. Rabobank will continue to invest in these

activities in 2020. Together with the other Dutch banks, Rabobank

is combining its strengths and is cooperating with the public

sector to efficiently take a joint stance against financial crime.

Climate RiskClimate change can affect the credit portfolio mainly via two

pathways: transitional risks and physical risks. Whereas

transitional risks usually manifest themselves through fixed points

in time, physical risks usually manifest themselves gradually over

time. Rabobank's credit portfolio is particularly vulnerable to

physical risks due to a combination of sector focus (F&A) and

geographical focus. In 2019, Australia and California were hit by

severe drought and intense bush fires a.o. leading to damage on

agricultural production that might impact our portfolio.

Regulatory changes with the intention to curb greenhouse gas

emissions are expected to increase going forward putting

pressure on especially those sectors highly dependent on fossil

fuels.

A Group Climate Oversight Committee coordinates initiatives

within the Bank related to climate change. Climate change risk

plays an increasingly important role in the credit granting,

approval and monitoring processes and there is active client

engagement by the first line aimed at improvements in their

businesses.

Nitrogen (PAS) and PFASThe Nitrogen Action Program (PAS) was suspended by the

Council of State in May 2019. This led to short-term effects in the

Netherlands and expected long-term necessary measures. In the

construction sector the effects of PAS were exacerbated by the

PFAS problem, being contaminated soil that was not allowed to

be used/transported anymore. After some months, the

government decided to relax the standards around contaminated

soil in order to make construction activities possible again. Of

course, clients in the above-mentioned sectors are hit and

sometimes need support. Rabobank closely monitors the possible

impact on our credit portfolio.



Elements of this press release are considered by Rabobank as

inside information relating directly or indirectly to Rabobank

within the meaning of article 7 of the Market Abuse Regulation

(EU Regulation 596/2014) that is made public in accordance with

article 17 Market Abuse Regulation.

The Consolidated Financial Statements of Rabobank have been

prepared in accordance with International Financial Reporting

Standards as adopted by the European Union (‘IFRS-EU’). In

preparing the financial information in this document the same

accounting principles are applied as in the Consolidated Financial

Statements of Rabobank, unless described otherwise. The

Consolidated Financial Statements 2019 are in progress and may

be subject to adjustments from subsequent events. The

Consolidated Financial Statements 2019 will be published on

March 12, 2020.

All figures in this document are unaudited.

Important Legal Information

release 2019 figures press rabobank annual · wholesale funding 151,742 153,223 160,407 188,862...

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